26-02-2013, 01:33 PM
(This post was last modified: 26-02-2013, 01:35 PM by specuvestor.)
(26-02-2013, 01:15 PM)yeokiwi Wrote:Interesting this is the similar logic regarding private developers and ABSD(26-02-2013, 12:27 PM)specuvestor Wrote: That means the distributor is taking a $10k hit to their margins. This may make sense for luxury cars but probably not for smaller cars.
This is similar tactic to other asset based transactions but end game is always a hit to the sellers' margins, primary or secondary market, and hopefully will adjust expectations going forward.
The new car prices(especially luxury cars) set by the distributors normally have a lot of rooms to play with.
That 10k hit is probably factored into the equation. For those who are willing to pay cash, they may even offer a 10k discount.
Besides that, the sale commissions, loan quantum, term of loan and interest rate are assisting tools of the distributor to play this high trade-in-value games.
The margin for smaller cars is tighter but to low budget car buyers, maybe a 1k discount is already enticing enough to swing their decisions.

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Think Asset-Business-Structure (ABS)
Think Asset-Business-Structure (ABS)